Consulting services normally come with a price premium because they grant access to the knowledge of experts, on demand and with the exact time commitment needed by the client. The alternatives to hiring consulting services are to train specialists in-house, which requires plenty of time; or hiring experts full-time, which is not always cost-effective.
Of course, this doesn’t mean consulting services should be overpriced either. Consulting firms and their clients can both take steps to optimize costs, making sure that the business relationship is mutually beneficial.
Discover why over-engineering drives up costs, without any benefit.
How Consultants Can Reduce Their Operating Costs
Consultant rates are often viewed as expensive, but it’s important to consider they have operating costs that are assumed by the hiring company in the case of employees. Nevertheless, there are many ways in which consultants can lower their rates without sacrificing their profits.
Engineering consulting is a type of business, even if the consulting firm is composed of only one individual! This means that consultants also require legal, accounting, financial and tax preparation services to operate. These areas are all out of the engineering field, and therefore consultants must rely on the services of other professionals.
For larger consulting firms, it can make sense to have a full-time staff to take care of supporting business functions. However, outsourcing is normally a better choice for smaller companies and freelance consultants. The benefits for consulting firms who outsource these support processes are very like those they offer to their clients.
Effective Project Management
A consulting contract can be considered a project, even if construction or MEP installations aren’t involved directly. This means that best practices in project management that apply for contractors can also be implemented with excellent results in consulting.
- For example, adequate project planning can allow a consulting service to be carried out more efficiently. This way, a consulting firm can reduce the total number of hours billed to their clients. In the case of fixed-price consulting services, efficient use of time increases the income per hour.
- Collaboration platforms can also make consulting firms more efficient: Their services normally involve working with plenty of technical information, and any tool that allows this information to be stored and shared in a simple way by team members saves workhours.
The Project Management Book of Knowledge, published by the Project Management Institute, provides excellent guidelines and best practices in the field of project management. Companies form all areas of engineering, including consulting, can achieve excellent results by implementing a solid project management framework.
Providing the Client with a List of Requirements in Advance
Since consultants are not part of the organization that hires their services, they don’t have access to all the information required for carrying out their work effectively. Their work may also involve accessing areas that are not open to the public, and someone from within the organization may have to assist them.
To avoid downtime once the consulting service is being carried out, consultants must make sure to provide a list of requirements in advance. This may include information and documents such as:
- Architectural, structural and MEP plans of the facility.
- Equipment lists, along with locations and specifications.
- Historical data on electricity and gas consumption, along with the associated utility bills.
Requesting this information on-site can be disruptive for the consulting service, causing a waste of time for both parties involved.
How Clients Can Optimize Their Consulting Expenses
There are also many ways in which clients can reduce engineering consulting expenses. The following are a few recommendations.
Hiring Local Consultants or Firms Whenever Possible
If consultants must assume travel and lodging expenses to provide their service, their rates are increased significantly. Therefore, it is recommended that companies hire consulting services locally whenever possible.
When hiring a consulting firm from another city or country is necessary, clients should make all the necessary preparations for them to deliver their service with one visit. Reducing travel expenses allows consultants to charge less for the total project.
Providing Requirements Clearly and Upfront
Consulting is characterized by having an open approach, where there may be many alternatives to solve a problem. However, consultants can be more effective if the scope of their work is defined clearly by the client – engineering is an extremely broad topic. For example, the skillset of a consultant specializing in chilled water plants is very different from that of a consultant specializing in solar power; a consulting firm can send the best team according to your specific needs if you state them clearly.
Providing Effective Assistant to Consultants
Although engineering consultants are experts in their respective fields, clients should keep in mind that they are not company employees, and the information they require to carry out their job may not always be available to them. Also, there may be cases when they must access areas of the building that are locked away from public access.
- Consultants will almost always send a document requesting all the needed information before they visit the facility. Clients should make sure all the data is gathered before they arrive to avoid wasting time.
- It is highly recommended that someone from the maintenance staff be assigned to assist the consulting team, so they can easily navigate any are of the facility. If the client company also has an in-house engineering staff, assigning someone from that department as well is highly recommended.
Adequate Selection of the Contract Type
Consultants may charge for their services by the hour, or a fixed price may be agreed by both parties involved. Each type of contract has advantages and disadvantages:
- An hourly contract means an hour of consulting work is an hour paid, which is a fair agreement for both parties assuming the project flows seamlessly. However, when the scope is not clearly defined or there are delays attributable to the client, the cost can increase significantly.
- Fixed-price contracts eliminate the risk of going overbudget, but consultants will typically agree only if the scope of the work is very clearly defined, since there will be no surprises that can extend the project significantly.
Clients can protect their budgets by negotiating fixed-price consulting projects whenever possible, but they must keep in mind that consultants may not be willing assume a fixed-price contract if it involves many unknown variables. Regardless of the type of contract, effective communication is key for the consulting service to be carried out without hurdles.
Engineering consulting services don’t have to be excessively expensive, and both consultants and their clients can take measures to optimize cost. Consultants can use outsourcing and best practices in project management, and their clients can make sure to provide all needed assistance for the consulting service to be completed without delays. Of course, work is simplified if both parties are clear and effective in their communication.